According to the analysis, ‘exploited’ social care workers lost an average of £815 each in 2013/14, due to NMW non-compliance.

Resolution Foundation says the primary cause is down to employers failing to pay staff adequate wages that cover all of their working hours. This includes time spent travelling between clients, unpaid training and ‘on call’ time.

Other reasons include the illegal deduction of pay, a common method uncovered by HMRC investigations and not included in the think-tank’s estimates. Resolution Foundation is calling for tougher enforcement of the NMW to put an end to this type of illegal activity.

The social care sector has long been associated with low pay, the think-tank claims. Funding cuts and an ageing population have led to increased pressure on job security and wages.

Resolution Foundation say that only a joint effort by the UK Government, local authorities and social care providers would put an end to the illegal exploitation of social care workers.

The analysis also found that just under two in five staff were only working part-time hours, while a growing number are foreign workers.

Social care providers hiring care workers on controversial zero-hours contracts is resulting in “weak collective bargaining power for better pay and conditions”, the research claims.

HMRC officials recovered more than £338,000 pay arrears from the sector between 2011 and 2013. This led to fines of £112,786 against employers failing to pay their staff the NMW.

Laura Gardiner, Senior Research and Policy Analyst at The Resolution Foundation, said: “Every worker has the right to the minimum wage yet illegal non-payment is all too common in the social care sector.

“It’s scandalous that these workers, who do such demanding and valuable work, are being cheated out of £130m every year through what is effectively ‘wage theft’ by their employers.

“Diminishing public funding and ever tighter commissioning practices are placing great pressure on care providers, but there is simply no excuse for breaking the law and HMRC urgently needs to get tougher on employers who do so.

“It’s welcome that the government has started to draw attention to this issue and beefed up enforcement powers but far more needs to be done given the scale of abuse.

“Social care will need to fill up to a million additional jobs in the next decade to meet the needs of our ageing population, so tackling the broader issue of low pay in this sector is a real priority.

“As well as helping to attract and retain staff and boosting the incomes of low-paid workers, better pay would ultimately lead to improvements in care quality.

“If we want to see dignity for those receiving care then we need to start investing in the workers who provide it.”